In 2007, Kazuma Kiryu and his adopted daughter, Haruka Sawamura, were at a cemetery, paying their respects to their lost friends and family. Kiryu's love interest, Kaoru Sayama, told Kiryu she was leaving Japan for the United States. In addition, detective Junichi Sudo told former detective Makoto Date that he and the other officers involved in the gang war the previous year were promoted in return for keeping silent about the fact that a member of the Jingweon mafia was able to successfully take on the false identity of Wataru Kurahashi and infiltrate the Tokyo Metropolitan Police force.
Kiryu, in an effort to leave his Yakuza past behind him, planned to take over as the manager of the Morning Glory orphanage in the Ryukyugai district of Okinawa. However, before he left Tokyo he visited his rival, Goro Majima. Majima had left the Yakuza to run a legitimate business, Majima Construction, and was in the process of building a skyscraper known as Kamurocho Hills. Kiryu was concerned that the man he picked to be the sixth chairman of the Tojo clan, Daigo Dojima, was too young and experienced. So, Kiryu convinced Majima to rejoin the Tojo clan as the head of his own organization within the clan.
Kiryu's time running the orphanage runs into problems when he learns that multiple eviction notices have been sent by Shigeru Nakahara, the owner of the land on which the orphanage lays, and a yakuza who is the head of the Ryudo organization. After Kiryu spots two men spying on the orphanage, he confronts them and learns they are part of the Ryudo organization. After Kiryu beats them in a fight, he is taken to see Nakahara, who explains that he is being pressured to sell the land to make way for a seaside resort. Nakahara refuses to reconsider selling, however, Kiryu states that he will not leave.
In 2008, the captain of the Ryudo family, Rikiya Shimabukuro, visits the orphanage and asks Kiryu to help find Nakahara's adoptive daughter Saki, who can not speak. Nakahara has become drunk and depressed as he believed that Saki had left to go to her mother, who has returned to Okinawa. Kiryu agrees to help and learns that Tetsuo Tamashiro, the head of a rival yakuza organization, was planning on selling Saki to get ahold of Nakahara's territory and that Saki's mother was helping him. After Tamashiro's defeat, Saki's mother said she didn't want Saki, so she chose to return to Nakahara. Daigo Dojima, the sixth chairman of the Tojo clan, visited the Ryudo organization. He revealed that Tamashiro was working with the politician Yoshinobu Suzuki, to secure the land for the resort and that Defense Minister Ryuzo Tamiya plans to get the land for his military base expansion bill.
In 2009, Daigo was shot and fell into a coma, Nakahara was also shot, and the deed to the orphanage was stolen. Saki provided Kiryu with a drawing of Nakahara's attacker, who looked exactly like Kiryu's deceased adoptive father, Shintaro Kazama. When Kiryu learned that Daigo Dojima was shot by the same man, he left the orphanage in the hands of rookie Ryodo family member Mikio Aragaki and his adoptive daughter Haruka and traveled back to Kamurocho.
Upon arriving in Kamurocho, Kiryu witnessed patrons being forcibly removed by the yakuza. He took care of the situation and learned that the Tojo clan was in a much worse condition than it was when he left for Okinawa two years prior. After being shot, Daigo was missing and presumed dead. With the power vacuum created, the Nishikiyama family wanted to take over the Tojo clan and planned to defeat the Kazama family.
Kiryu headed to the millennium tower to meet with Kashiwagi, the captain of the Kazama family, to warn him of the attack as well as to find out what he knew. Unfortunately, a military helicopter opened fire on Kashiwagi's office. Kiryu successfully dodged the attack, but Kashiwagi was fatally wounded. Before he died, Kashiwagi told Kiryu that someone in the Tojo clan was working with the Kazama doppelganger.
Kiryu went to New Serena to talk with Makoto Date, who was working as a reporter. Date told Kiryu that only one of the Tojo clan's top patriarchs, Tsuyoshi Kanda, Go Hamazaki, Yoshitaka Mine, or Goro Majima would be in a position to upend the Tojo. Due to his outspoken desire to become the seventh chairman of the Tojo Clan, the top suspect is Kanda, the patriarch of the Nishikiyama family. However, after his defeat at the hands of Kiryu, Kanda revealed that the more likely suspect was Hamazaki, as he was working with Kiryu's nemeses, the Snake Flower Triad.
Kiryu took the information back to Date at New Serena, only to be shown a picture of Majima working with the enemy. Not wanting to believe that his trust was misguided, Kiryu headed to Purgatory to get Majima's side of the story. Majima revealed that his family was working on the construction of the Osaka resort, which stopped production of the Kamuro Hills complex over Purgatory. Majima further revealed that he only did so to keep his promise to Kiryu that he would watch over Daigo Dojima, as Majima wanted to take on grunt work for the Tojo so Dojima could keep his mind on keeping the Tojo clan together.
Majima and Kiryu were taken below Purgatory to the monitoring room, where it was revealed that the Florist of Sai had returned from his brief stint on the fiftieth floor of the Millenium Tower. The Florist showed Kiryu a monitor that revealed that Rikiya, who followed Kiryu from Osaka to Kamurocho, was being targeted by the Snake Flower Triad.
Once Kiryu defeated the various Snake Flower Triad members spread out across Kamurocho, he reached their leader, Lau Ka Long, who revealed that he teamed up with Hamazaki only to get revenge on Kiryu. After Kiryu defeated Lau, the Snake Flower Triad members holding Rikiya were about to execute him. However, those triad members and Lau were shot by the Kazama doppelganger, who implies he is Shintaro Kazama's brother.
After taking Rikiya to a taxi so he can return to Osaka, Kiryu is contacted by Ryuzo Tamiya, who has put forward a plan for a U.S.-backed Osaka naval base. Thus, Kiryu and Date head to the National Diet building to hear what he has to say.
Tamiya surprises them by revealing that he wants the Osaka resort to not happen and that he never intended for the military expansion bill to pass. The bill was just a ploy by Tamiya and his CIA operative friend, Joji Kazama, Shintaro Kazama's brother, to lure out an international terrorist group known as Black Monday. Kazama left the police force as he was shamed for having a yakuza brother, and the CIA reached out to him when he was at his lowest point. Thus, he gives his entire loyalty to the CIA, even when told to shoot his own countrymen, such as Daigo and Nakahara, or to order the assassination of Kashiwagi. The resort is being pushed by Mine of the Tojo clan, and Tamiya wants Kiryu's help to stop Mine in order to keep his former secretary, Toma, from being assassinated by Kazama.
After the two finished their fight, Joji reveals to Kiryu that another CIA officer shot Dojima and Nakahara. However, while Kiryu was fighting Joji to convince him to not kill Toma, Mine sent some yakuza to destroy the Morning Glory orphanage. The yakuza shoot Rikiya and Minio in the leg, strike Minio twice with a sledgehammer, bulldoze Morning Glory, and brought Nakahara back to their hideout.
Kiryu saved Nakahara, but when Kiryu was about to be shot, Rikiya stood in front of him. Rikiya took the bullet in his chest and died from his wounds.
Joji revealed that he learned Daigo was being held at Touto hospital, just outside Kamurocho. Warning that Mine likely knew his location too due to his involvement with Black Monday, Joji arranged to have a US fighter jet take Kiryu quickly back to Kamurocho.
Mine told Kiryu that he was an orphan that had to fend for himself growing up and that Daigo was the only person he ever looked up to. He felt that Daigo was as good as dead, due to being in a coma. He tried to shoot Daigo, but Kiryu stopped him and defeated Mine.
As agents arrived, it was revealed that they were actually a front for Black Monday. The person who shot Daigo and Nakahara and killed Kashawagi was revealed to be Richardson, the head of Black Monday.
Richardson tried to shoot Mine, but he was instead shot by Daigo, who had just woken from his coma. Realizing that he almost killed the only man he ever trusted, Mine grabbed Richardson and committed double suicide by jumping off the roof of the millennium tower. Daigo asked Kiryu if Mine was the mole, and Kiryu told him that he wasn't in order to have Daigo retain his fond memories of him.
As Kiryu was walking with Haruka in Theater Square, Go Hamazaki appeared behind Kiryu and blamed him for his problems. Kiryu tried to convince him that it wasn't too late to turn his life around, but Hamazaki stabbed him and mocked his optimism.
Months later, the orphanage was rebuilt, Minio and Kiryu recovered from their injuries, and the children happily played outside of the orphanage once again.
